The news report reads (in part): “Alberta's new premier-designate wants more of the oilsands to be processed within Alberta instead of being transported as a crude resource to the United States." Stelmach wasn't offering any specifics on how that would work, but refining the synthetic crude oil derived from tar-like bitumen is an expensive process that most companies have determined is uneconomic to perform in Alberta.”

Stelmach’s remark was prompted by this fact: “EnCana Corp announced a $15-billion deal with ConocoPhillips in October to ship oilsands crude from Alberta to refineries in the United States. That pact came after EnCana spent years looking for a partner to handle refining operations.”

The news report continues: “Stelmach also pledged to review the province's oilsands royalty regime amid an outcry from ordinary Albertans unsure that the industry is paying enough to cover the social and infrastructure costs linked to the energy boom.”

Stelmach’s proposal to increase oilsands royalties may have been prompted by a November 2006 report Thinking Like an Owner from the Pembina Institute. A summary of that report: “The environmental think-tank released a report last week noting that despite record prices and production, the amount of royalties from oil has decreased by one-third over the past decade.”

I quote the introduction to the Pembina Institute’s report: “Between 1996 and 2005, world oil prices more than doubled and production of the oil sands, spurred on by federal subsidies and low provincial royalty rates, increased by 123%. Amazingly, during the same time period, Albertans, the owners of the oil sand resource, saw their share of this economic boom in the form of royalty revenues decline for each barrel of oil from the oil sands. Albertans received $3.39 in royalties for each barrel of oil sands oil in 1996 and only $2.29 in 2005.”

Lower taxes to support the development of an industry is standard economics—witness the 1872 USA Mining Law—and witness its longevity! Not being an Albertan deprived by this nefarious tax give-away to US companies, I should refrain from comment. Personally I enjoy the lower gas prices in the US as compared to those in Canada—and if the tax policies and refining locations contribute to the lower price, I am happy to support them—as long as I can enjoy the benefits of good public transport in Vancouver. Does Calgary and Fort McMurray have as good a system as Vancouver? If not, then I would vote to increase taxes to provide one.

My excuse for such contradictory perspectives: as the December 2006 Scientific American puts it “Citizens thoughtfully weigh the pros and cons of arguments before choosing their leaders--or so political science has traditionally assumed. Now experiments and computer models are challenging this notion, suggesting that voters tend to make emotional decisions that they rationalize afterward.”

What with new politicians in the USA, the Canadian Liberal Party, and Alberta, it is anybody’s guess how the taxes on oil sands will change.

P.S. See this link to find out how Mongolia approached a similar issue.